SoftBank, Symbotic establish GreenBox Systems JV and announce $7.5B contract

SoftBank (SFTBY) and Symbotic (SYM) announced the establishment of GreenBox Systems, a new joint venture, or JV, to address the more than $500B annual warehouse-as-a-service market opportunity. Concurrently, Symbotic also announced an approximately $7.5B new customer contract with GreenBox, who will be the exclusive provider of Symbotic systems in the warehouse-as-a-service market, and will make supply chain services available to customers. GreenBox will automate supply chain networks globally by operating and making accessible Symbotic’s advanced A.I. and automation technology for the warehouse. Symbotic’s A.I.-powered robotics and software technology will be the cornerstone of GreenBox, installed in single and multi-tenant facilities. The efficiency, SKU agility, scalability, and density of the Symbotic system allows GreenBox to effectively manage single and multi-tenant facilities across the supply chain and thus fundamentally reshape the economics of automated supply chain services. Enabled by these technologies, GreenBox customers will be able to reduce inventory and costs while boosting SKU count and agility, all without associated capital expenditures and operational complexity. GreenBox will order Symbotic’s systems over a six-year period commencing in fiscal year 2024, to be implemented across its warehouse network in larger-scale deployments than Symbotic’s current installed base systems. Symbotic expects in excess of $500M in annual recurring software, parts and services revenue from GreenBox once all systems are operational. Symbotic systems typically become fully operational within 24 months of project design approval. GreenBox’s board of managers will comprise three managers, one nominee from each of Symbotic and SoftBank, and one independent manager. GreenBox’s management team will be independent from Symbotic and SoftBank. SoftBank and Symbotic own 65% and 35% of GreenBox, respectively, with the joint venture established. GreenBox will initially be funded with $100M of capital contributed pro rata by Symbotic and SoftBank to fund operating expenses and initial system purchases. After Symbotic’s initial $35M pro rata capital contribution, the contract is expected to be accretive to Symbotic’s annual free cash flow. Symbotic has issued warrants to SoftBank representing up to 2% of Symbotic’s fully diluted shares outstanding, which will vest in 0.25% increments upon payment of each $937.5M to Symbotic for installation of Symbotic systems under the GreenBox contract. The warrants have a 6-year term and strike price representing Symbotic’s 45 trading day volume weighted average price as of July 21 of $41.9719 per share. Separately, SoftBank has purchased approximately 17.8M shares from Symbotic Chairman and CEO, Rick Cohen, at Symbotic’s 45 calendar day VWAP as of May 26, 2023, of $28.05 per share. This sale is 100% secondary shares and will not result in any dilution to Symbotic shareholders.